Ford Motor Co (NYSE: F) and Liontown Resources Ltd. announced a lithium supply agreement, the Australian miner’s newest after a previous agreement this year with Tesla Inc. (NASDAQ: TSLA) and LG Energy, a manufacturer of electric vehicle (EV) batteries.
Liontown Resources to supply Ford with lithium spodumene extract
Ford will receive 150,000 dry metric tonnes (DMT) of lithium spodumene extract annually from Liontown’s premier Kathleen Valley mine in Western Australia for the next five years, the company announced on Wednesday. The concentrate provides the lithium needed to create electric vehicles.
The market capitalization of Liontown, a tiny mining firm led by Australian businessman Tim Goyder, increased to almost A$2.5 billion as shares rose 17 percent in early trading but then decreased to trade up 5.6 percent by midday.
The EV market has increased due to a global drive for decarbonization and attaining zero carbon emissions, which has led to record-high costs for battery materials like lithium.
In an effort to better compete with Tesla, Ford, which is placing a significant bet on EVs, announced in March that it would increase its expenditure on EVs by two-thirds to around $50B through 2026 and operate its EV segment separately from its heritage combustion engine company.
Ford has a joint venture with South Koren firm SK Innovation
The American automaker has a partnership with South Korean company SK Innovation’s EV battery manufacturer SK On. The company, known as BlueOvalSK, intends to produce 129 gigawatt-hours (GWh) of batteries annually in the US.
In order to advance the Kathleen Valley mine Liontown claimed to have obtained a credit line of A$300 million ($207.21 million) from a division of Ford.
The Australian mining firm is anticipated to begin providing spodumene extract in 2024, with a first-year commitment of 75,000 DMT and a third-year increase to 150,000 DMT. The company will also supply Tesla with 100 DMT of spodumene concentrate from 2024 before increasing to 150 DMT.
Lithium prices have risen sharply in recent years as automakers shift toward electric vehicles, forcing producers to scramble to keep up with demand.
